U.S. Indices closed well in the green on Monday as President Trump halted attacks on Iranian energy and power infrastructure for five days. This led to a reduction of the geopolitical risk premiums with stocks rallying and crude tumbling. Crude settled well off the overnight peaks and helped ease some of the inflationary concerns too, in turn seeing global yields move lower, particularly at the front-end, as hawkish rate bets eased somewhat from the shift seen at the end of last week. Although a welcome development, the Iranian side has largely pushed back on Trump’s claims that talks between the US and Iran were held, but Trump was adamant that they occurred. This still leaves a lot of uncertainty, but the overall messaging is a positive one with Trump making an effort to de-escalate for now. Trump has suggested talks will be held this week and a deal could be announced within five days. The developments led to a weaker U.S. Dollar due to the risk-on trade. NZD, GBP, JPY, EUR, and CHF all managed to strengthen vs USD in the risk-taking environment, while AUD and CAD lagged with marginal gains. Behind the two underperformances was likely a pullback of outperformance in recent weeks, given their energy independence. Gold was still lower, but well off the overnight lows, with the precious metal trading between USD 4,098-4,536, currently just above USD 4,400 heading into Asian trade. Silver and Bitcoin saw gains. The Chicago Fed President (Goolsbee) noted that the Fed could be back in an environment of multiple cuts, but he also sees conditions where the Fed would hike, noting the Fed are in an intense moment with a lot in the balance. Goolsbee warned that historically, oil shocks have been stagflationary, making both inflation and joblessness worse. He noted at best that inflation has stalled, and the Fed is waiting for that to go away. However, he remains optimistic that Interest Rates could go lower by year-end, but he is still awaiting proof on inflation. He noted gas prices have a high impact on household expectations, but inflation expectations remain anchored. On the labour market, he said the economy is near full employment, raising inflation concerns, while noting that inflation now appears to be the primary risk. Fed Governor Miran (Dove) confirmed he pencilled in four rate cuts this year (versus six in prior projections, but he did say this was his view pre-meeting). Despite the ongoing risks, Miran continues to push for lower rates, noting that the Fed should not be making policy based on short-term headlines and that it is premature to judge the current situation. Miran suggested he does not want to respond to oil price shocks, in case it leads to a wage price spiral, while noting that the labour market could benefit from additional support. He suggested the Fed typically looks through the first round of all price shocks, noting it would be unusual for them to focus on them this time around. However, he stressed this is not his base case, but second round effects and wage rises could require a rate hike, but current conditions do not warrant rate hikes. Miran did state he needs more clarity on whether policy should react to current events but his outlook remains for rate cuts. He also said that the balance of risks got worse on both sides. Elsewhere, Oil closed lower by 10% while Gold ended Monday’s session with a loss of 1.75%.
To mark my 3350th issue of TraderNoble Daily Commentary I am offering a special 2-Year Rate of Euro 2750 for my Platinum Service which includes 1 to 4 updated emails throughout the trading day to demonstrate this value, a monthly subscription over the same period would cost 4440 euro in total This offer represents a 38% discount and is open to both new and existing members. If anyone is interested in this offer can you please email me on bryan@tradernoble.com for details
For anyone following my Platinum Service it made 1620 points yesterday and is now ahead by 5751 points for March having closed February with a strong gain of 5482 points after ending January with a gain of 4757 points, having closed December with a gain of 2599 points, after ending the month of November with a gain of 4542 points, after ending October with a nice gain of 5110 points after closing September with a gain of 3774 points while ending August with a gain of 3362 points after closing July with a gain of 3753 points after closing June with a gain of 3530 points, having closed May with a gain of 3606 points, after closing April with a gain of 7685 points after closing March with a gain of 2254 points while closing February with a gain of 4180 points. January ended with a gain of 2768 points while 1997 points were gained in December. October ended with a gain of 2179 points, after closing September with a gain of 4402 points, following a loss of 301 points in August. July gained 1908 points while June saw a gain of 2074 points. The Platinum Service made a record 9619 points in October 2022. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 2300 points. I have a YouTube Channel which contains recent interviews I have given This can be viewed by clicking HERE Please subscribe to this for new interview notification
Equities
The S&P 500 closed 1.15% higher at a price of 6581.
The Dow Jones Industrial Average closed 631 points higher for a 1.38% gain at a price of 46,208.
The NASDAQ 100 closed 1.22% higher at a price of 24,188.
The Stoxx Europe 600 Index closed 0.61% higher.
Yesterday, the MSCI Asia Pacific closed 1.2% lower.
Yesterday, the Nikkei closed 3.48% lower at a price of 51,515.
Currencies
The Bloomberg Dollar Spot Index closed 0.49% lower.
The Euro closed 0.19% higher at $1.1594.
The British Pound closed 0.51% higher at $1.3415.
The Japanese Yen rose 0.44% closing at $158.53.
Bonds
U.K.’s 10-Year Gilt closed 8 basis points lower at 4.86%.
Germany’s 10-Year Bund Yield closed 6 basis points lower at 2.99%
U.S.10 Year Treasury closed 3 basis points lower at 4.35%.
Commodities
West Texas Intermediate crude closed 9.61% lower at $88.79 a barrel.
Gold closed 1.74% lower at $4414.10 an ounce.
This morning on the Economic Front we have German, Euro-Zone and U.K. Composite PMI at 8.30 am, 9.00 am and 9.30 am respectively. This is followed by a 10-Year U.K. Gilt Auction at 10.30 am. Next, we have U.S. Manufacturing PMI at 1.45 pm and the Richmond Fed Manufacturing Index at 2.00 pm. Finally, we have a speech from ECB Member Lane at 3.45 pm and a Two-Year Treasury Auction at 5.00 pm.
Cash S&P 500
The S&P 500 finished the day higher by roughly 1%, though they had been up significantly more at one point earlier in the session—nearly 2%—following a sharp decline in the price of oil. The move came amid speculation that the war in Iran may be over soon, given President Trump’s willingness to negotiate. However, those claims appear to have been denied by the Iranian government, leaving investors largely uncertain about what happens next. Regardless, WTI oil prices fell below $90, and the market tried to run with it. Perhaps more importantly, the S&P 500 rallied right into its short-term moving average resistance—a level that has capped every attempt at a bounce going back to March—and failed. That tells you a lot. The S&P has been unable to break through this ceiling, and until it does, it is hard to get too constructive on the market. The pattern remains the same: rally into resistance, fail, and head lower. That said, the index is no longer in a deeply oversold condition. The RSI has climbed off the lows, and we have moved away from the lower Bollinger Band. But “no longer oversold” and “bullish” are two very different things. If Monday’s failure at resistance follows through, we could very well be looking at new lows later in the week. What stood out yesterday was the VIX. Given the magnitude of the decline in oil and the attempted rally in stocks, you would have expected implied volatility to have come down meaningfully. It did not. The VIX barely budged. That is a signal in itself—it tells you that the options market is not positioned in a way that would allow a drop in volatility to provide a tailwind for equities. And Monday’s price action confirmed that. The boost from falling volatility that you might typically expect in this kind of setup just is not there right now. It all comes back to the same story: until oil meaningfully breaks, and until the S&P can clear its overhead resistance, rallies are going to keep getting sold. For this to happen we need to see Oil break and close below $80. I am still long the S&P from Friday at an average price of 6530. It is unusual for me to not take the substantial gains on offer yesterday, but the markets were moving so quickly that I needed to have had my T/P level in Monday’s Daily Commentary and I did not. Today, I will have a T/P level on this long S&P position at 6630. I will continue to have no stop and if this view changes I will be back with a new update for my Platinum Members. For what it is worth the McClellan Oscillator improved substantially on Monday closing at -108
EUR/USD
My Euro call worked well as the market traded lower to my 1.1490 buy level before rallying to my 1.1560 T/P level and I am now flat. Today, I will again be a buyer on any further dip lower to 1.1450/1.1520 with a higher 1.1385 ‘Closing Stop’. If I am taken long, I will have a T/P level at 1.1590.
Dollar Index
Frustratingly the Dollar just yesterday’s 100.20 sell level by five points before falling over 70 points into the close and I am still flat. Today, I will lower my sell level to 100.00/100.80 with a lower 101.55 ‘Closing Stop’. If I am taken short, I will have a T/P level at 99.40.
Russell 2000
My Russell plan worked well as the market traded lower to my 2410 buy level before rallying to my 2470 T/P level and I am now flat. Today, I will again be a buyer on any dip lower to 2390/2460 with a higher 2335 ‘Closing Stop’. If I am taken long, I will have a T/P level at 2510.
FTSE 100
My FTSE plan worked well as the market traded lower to my 9780-buy level before rallying to my 9960 T/P level and I am now flat. A combination of a 10% fall in Oil and Gilt Yields falling by 10 basis points helped the FTSE to rally on Monday. Today’s 10-year Gilt Auction will closely watched to see what demand there is for Gilts following the large move higher in yields over the past three weeks. The FTSE has support below from 9800/9890 where I will again be a buyer with a 9725 ‘Closing Stop’. If I am taken long, I will have a T/P level at 9970.
Dow Rolling Contract
My Dow plan worked well as the market traded lower to my 45200-buy level before rallying 1700 points. This move higher saw my 45910 T/P level triggered and I am now flat. Today, I will again be a buyer on any dip lower to 45500/45800 with a 45355 tight ‘Closing Stop’. If I am taken long, I will have a T/P level at 46290.
Cash NASDAQ 100
My NDX call worked well as the market hit my 23700-buy level shortly after the Futures Markets opened on Sunday evening before rallying to my 24180 T/P level and I am now flat. The NDX has strong resistance at its 200-Day Moving Average which comes in at a price of 24371. The NDX tagged this level a few times on Monday before attracting strong selling. The NDX has short-term support below from 23650/23950 where I will again be a buyer with a higher 23395 ‘Closing Stop’. If I am taken long, I will have a T/P level at 24180.
December BUND
My Bund plan also worked well as the market traded lower to my 125.60 buy level before rallying to my 126.80 T/P level and I am now flat. Today, I will again be a buyer on any dip lower to 125.40/126.20 with a higher 124.65 ‘Closing Stop’. If I am taken long, I will have a T/P level at 126.90.
Gold Rolling Contract
Gold got hit hard on Monday before recovering large chunk of these losses into the New York close. This move lower saw Gold hit my second buy level at 4380 for a now 4430 average long position. I will now lower my T/P level to 4495. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Silver Rolling Contract
No Change: Incredible two-way volatility in Silver since Thursday’s Daily Commentary was posted. Although Silver is extremely oversold I am going to stay flat especially as I am long Gold which is enough exposure for now. If Silver continues to sell-off I will be back with a new buy level for my Platinum Members.
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